Nippon Steel's U.S. Steel Bid: CFIUS Referral to Biden Raises Stakes

The Committee on Foreign Investment in the United States (CFIUS) has referred the proposed acquisition of U.S. Steel by Japan's Nippon Steel to President Joe Biden, marking a significant turning point in the contentious deal. The referral, following CFIUS' inability to reach a consensus on potential national security risks, has raised the stakes for both companies and the U.S. steel industry as a whole.

The proposed merger, valued at approximately $14.9 billion, has been a subject of intense debate and scrutiny. Nippon Steel, Japan's largest steelmaker, aims to acquire U.S. Steel in an all-cash transaction, with the combined entity becoming one of the world's top three steelmakers. However, the deal has faced opposition from various quarters, including the United Steelworkers union and politicians on both sides of the aisle.



The referral of the decision to President Biden has placed the final call in his hands. Biden, who has previously expressed his opposition to the deal, has 15 days to make a decision. The President's stance aligns with his broader economic and national security objectives, as he seeks to maintain strong American steel companies powered by American steelworkers. This position is supported by the United Steelworkers union, which has raised concerns about job security and the potential impact on American steel production.

The lack of consensus among CFIUS members indicates a divided opinion on potential national security risks. This deadlock shifts the decision-making power to President Biden, who is expected to block the deal based on his previously stated views. The political pressures, such as those from President Biden and the United Steelworkers union, play a significant role in the CFIUS referral process, potentially swaying the final decision.

The CFIUS referral process could extend the timeline for the merger's approval or rejection. CFIUS has 30 days to complete its review, but this period can be extended if the President requests additional information. Biden has 15 days to decide after receiving the referral, but he can also extend this period. If Biden decides to block the deal, he must issue an order within 15 days of his decision. This process could take up to 75 days, potentially delaying the merger's completion.

In conclusion, the referral of the Nippon Steel-U.S. Steel deal to President Biden has raised the stakes for both companies and the U.S. steel industry. The lack of consensus among CFIUS members and the political pressures at play could influence the final decision, with the outcome having significant implications for the U.S. steel industry's competitiveness, supply chain resilience, and labor market dynamics. As the decision-making process unfolds, the future of this high-stakes merger remains uncertain.